Merck agreed to issue 5 million new shares of Seagen common stock at a price of $200 per share, Seagen said. In addition, the pharmaceutical giant paid $600 million in upfront costs to collaborate and equally share costs on the global development of ladiratuzumab vedotin and other LIV-1-targeting antibody-drug conjugates (ADCs).

Beyond the upfront investment and equity, Seagen is also eligible to receive up to $850 million in development milestones and $1.75 billion in sales milestones. This brings its total potential payout to $4.2 billion, Seagen noted. The deal closed following the required federal waiting period.

Ladiratuzumab vedotin contains a monoclonal antibody that has the potential to bind to and disrupt LIV-1 proteins found in some breast, lung, head and neck, esophageal, and gastric cancer cells. It may also stimulate the immune system for additional antitumor activity, noted Seagen.

Under the deal terms, both companies will be responsible for half of the total costs and profits to develop ladiratuzumab vedotin and similar ADCs. The companies will also jointly commercialize any solutions in the U.S. and Europe.

In addition, the companies agreed to split marketing approval and sales recording efforts. Seagen will oversee regulatory approvals in the U.S. and Canada, while Merck will submit approvals elsewhere. Similarly, Seagen will count sales in the U.S., Canada, and Europe, and Merck will focus on sales efforts in other global regions.